How to deal with "cheaters" regarding billable time?

Question

I work for a company that uses outsourced contract developers paid hourly but physically located in our office. At the end of every month we get an excel sheet from their outsourcing companies with the appointed hours and the bill.

Many of these contractors 'cheat' when logging their hours. They will come in at 10:15am but bill from 10:00am, or they will log hours that they spent on personal business. Altogether, they are billing around 10% more hours than they are actually working.

If I bring up the problems with logging time there is a good chance I would have to look for replacements. While they may not be billing their time properly, they are getting the work done to an acceptable level. Finding replacements could be time-consuming and may be quite difficult.

Is it unprofessional to turn a blind eye to the billing discrepancies as long as I am satisfied with the quality of work?

Answer 1

It seems to me that the actual question here is: is Joe worth the money I’m paying him or not? And that kind of question is better answered over time, say, in the last 3 months: on one hand, having Joe on the team made me “X amount of money”, and on the other, hand I payed him “Y amount of money”.

For every context there is probably more to the equation, but this is a simple start.

UPDATE

If Joe gets the job done on time, it shouldn’t matter much wether he did while being in the office sitting silent in front of the computer, or from home in the early morning, or from his favourite coffee-shop. Development is creation and people have different ways to create.

As long as the job get done on time and they behave reasonably in a general sense, I would not worry about anything else. If they have a life outside the job, it’s very natural that they can give it some time during the day. More than that: this is healthy and you should expect that. If you have read “Rework”, you already understand what I mean, but if you haven’t I’d recommend reading it.

The question is: is this acceptable? Am I being "not ethic" somehow; am I morally obliged to do something about it, disregarding how I feel about the situation and how I feel about the company I work for?

Well, I generally think that if people are not by themselves interested to get the work done, no matter how much policy you impose on them, they will find workarounds. Distrust is dehumanising, and this affects you too, in a bad way. And instead of doing that, you indeed may be better off finding someone else.

Answer 2

If you allow them to fudge their recorded hours you are essentially paying them based on what they produce not how long they spend in a chair acting productive. If at the end of the month you are happy with the product they give you, for the price they demand then it is fine to pay that amount. You are telling them that for that amount and quality of product I am willing to pay 160 times X$.

If they worked out of your view, they would be telling you this is what i produced each month. You would have no idea if they did it in half the time or double the number of normal work hours.

Your logging of entrance and exit times tells them that butts in the seat is the important metric. If you monitor the computer usage you are telling them they need to be more sophisticated in their use of time. It also tells them that a significant part of your day will be watching their day.

What also needs to be considered is who is ultimately paying for the product and how is the contract structured. Do they control their workload? Testers with nothing to test still need to be around. Developers waiting for management to decide on the real requirements still need to be paid. If you require that the work be done at your location, using your equipment, and the only metric for pay is hours, then you are getting exactly what your company negotiated.

Answer 3

Consider, are you purchasing time, or are you purchasing results.

If you are purchasing time your contractors become time salesmen. Their incentive is now to work as slowly as they can reasonably get away with to maximise the value of each hour. Their other incentive is to produce unmaintainable products so further hours will be required in the future.

If you are purchasing results their incentive is to work as quickly as they can (and as well as they can to improve future productivity) so they can get their work done and get paid.

As a contractor I prefer to work to a fixed price fixed spec. Being a time salesman is no fun at all.

Answer 4

If you're expecting anything other than 40 hours per week to appear in their time sheets, then it's something to consider carefully. Computer work does not usually require physically using the keyboard and mouse 8 hours a day / 40 hours week. If someone clocks in at 10:15am, there is a good chance that they spent at least 15 minutes thinking about how to solve their current problem sometime between midnight and 10:15am. Focusing on such minute details is likely to lead to lower productivity, lower motivation and lower quality.

Answer 5

Two things to do here:

1. Keep a log: If "facetime" is important, then keep a log (Excel etc) of when people come in/go to lunch/go home. When the timesheet comes from the agency you are then armed to dispute it with them, they'll deal with their workers (I'm assuming you sign off on timesheets for your contractors)
2. Surfing etc: talk to your IT infrastructure dept, they will likely have web filtering software that can tell you where and when for staff. If this is outwith acceptable usage, issue a memo to the contractors telling them of the rules, and continue monitoring. Anyone abusing gets reported back to the agency.

This is what you can do, although in my experience none of this usually matters if the contractors are delivering value in their work, so you may have a more fundamental problem you need to resolve.

Answer 6

Excel spreadsheet seems like a pretty low-tech way to log times, I'm sure there are plenty of apps that allow users to sign on and sign off when they log onto their computer allowing you better time-tracking. But I also think it's acceptable to have a little bit of slack in the system as you probably don't want your people complaining that they're working in a sweatshop.